FX round-up: Japanese policymakers warn against excessive Yen weakness
In an interview with Bloomberg Koichi Hamada, a consultant to the Japanese Prime Minister, delivered a stark warning regarding the weakness of the country’s currency, the Yen.
For Hamada a value of 105 yen per dollar would be “appropriate”. That is far below the current market value of 120.
Traders may also have been surprised by his remarks regarding the lack of any need “to force” inflation back to the central bank’s 2% target.
The above remarks follow those of other Japanese officials recently, which may lead markets to temper their expectations for additional stimulus from the Bank of Japan.
The dollar/yen traded down by 0.11% to 120.05. Morgan Stanley lowered its year-end forecast for the currency pair to 123 yen from 127 yen.
Euro/dollar ended the day down 0.31% to 1.0576, near its recent twelve year lows.
That came as some analysts seemed to be converging on September as the most likely date for the first interest rate increase from the Fed.
Those at RBC revised their Fed rate call to September from June. They added that if upcoming data releases exceed expectations then a rate hike in July was increasingly possible.
Cable rose a touch to finish trading 0.13% higher at 1.4673.